Saudi Arabian VAT Rates

Updated on :  

08 min read.

Value Added Tax (VAT) was introduced in the Kingdom of Saudi Arabia (KSA) in January 2018. At the time of introduction, the basic rate of VAT applied on taxable supplies and imports in KSA was 5%. A decree was issued dated 11th May 2020 clarifying change in VAT rates and transitional rules for VAT rate change which will decide the tax liability given taxable supplies and some other special cases.

What is the basic VAT rate in KSA?

The basic VAT rate was 5% on the introduction of VAT in 2018.

What is the revised VAT rate in KSA?

The VAT rate was revised to 15% w.e.f  1st July 2020.

List of supplies on which 0% VAT is charged

To qualify supply for zero rates, the supplier should be registered for VAT in KSA. Also, goods and services should be supplied in lieu of any monetary or non-monetary consideration.

Below is the list of supplies on which 0% VAT is charged:

  • Exports of goods
  • Services supplied to non-GCC residents
  • International goods and passenger transport services
  • Supply of Qualifying means of transport
  • Qualifying medicines and qualifying Medical Goods
  • The first supply, or supply for investment, of Qualifying Metals (gold, silver or platinum)

Transitional provisions for charging 15% VAT

Due to the revision of tax rates in KSA, there were high chances of ambiguity regarding accurate tax rates for the particular contracts and tax invoices issued before 11th May and completed in the transitional period or after completion. Therefore, transitional provisions were issued by Zakat, Tax and Customs Authority (ZATCA) to avoid any misuse of dates relating to the calculation of tax.

Below are some special cases mentioned in transitional provisions:

Contracts signed with government entities

Before 11th May 20205% rate will apply until the date of: Expiration, Renewal 30th June 2021(which is earlier)
Between 11 May 2020 and 30 June 2020For supplies made before 1st July 2020- 5% rate
For supplies made on or after 1 July 2020 – 15% rate

Contracts signed between VAT registered persons

Before 11th May 20205% rate will apply until the date of: Expiration, Renewal 30th June 2021(whichever is earlier)
Between 11 May 2020 and 30 June 2020For supplies made before 1st July 2020- 5% rate
For supplies made on or after 1 July 2020 – 15% rate
Contracts signed before 11th May 2020 and supply will continue on or after 1st July 20205% rate will apply until the date of: Expiration, Renewal 30th June 2021(whichever is earlier)

Tax invoices

Tax invoice issued before 11th May 2020 If actual supplies take place between July 1, 2020 and June 2021- 5% rate
Tax invoice issued between 11th May 2020 and 30 June 2020Supply made on or before June 30, 2020- 5% rateSupplies taking place on or after July 1, 2020 –  15% rate
For periodic tax invoices issued on continuous supplies issued before 11 May 2020Part of supply completed before  July 1, 2020 – 5% rateSupply taking place after July 1, 2020- 15% rate

List of goods and services on which 15% VAT is charged

All goods and services except exempt supplies and zero-rated supplies are subject to 15% VAT.

KSA VAT rate on imports and exports

Goods imported into the KSA on or after 1 July 2020 are subject to15% rate. However, the rate was 5% before the amendment of VAT rates in KSA.

Exports of goods and services outside the council territory are deemed zero-rated supplies, i.e. tax is charged at a 0% rate. Also, the business is allowed to recover the associated input VAT by provisions of VAT.

Hide →
CONTENTS
Explore more
Book a demo

Please fill in your details and our representative will get in touch with you shortly

Thank you for your response

Our representative will get in touch with you shortly.